It’s a big ask to get teenagers excited about superannuation. But being able to manage your money, understand how credit cards work, plan for big purchases, navigate university debt, save and, yes, how to prepare for retirement, are all critical skills required to navigate life. This week on School Stream, we look at all the big issues when it comes to financial literacy to give an overview of how students and teachers feel, as well as some expert insights into how we can best tackle the decline in financial literacy among Australian students. In short, we answer the big question: Can being ‘good with money’ be taught and learned?
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Australian schools already play a meaningful role in delivering financial and consumer education, and a growing body of research supports the introduction of a cohesive, relevant, standalone financial literacy program. It seems teachers agree too. When surveyed, 94 % of teachers felt it was important for children to learn about money and finance.
What do students know about money?
Research commissioned by independent charity Financial Basics Foundation, in partnership with Suncorp Bank, published their findings in March this year and found that there are serious gaps in the financial knowledge of Australian students. The study – The Financial Literacy of Young Australians Report by Dr Laura de Zwaan and Dr Tracey West of Griffith University – found that while some students were aware of financial concepts such as interest, inflation, investing, insurance and superannuation, most had little or no knowledge and/or understanding of personal finance. Worryingly, the same report found that:
“16% of Australian 15-year-olds lack even the basic level of financial literacy they need to participate in society.”
It feels like an understatement to describe this as concerning. We all want students to be equipped to make solid life choices when they leave school, fortunately, research shows there is plenty of cause for optimism too.
Why is financial literacy important?
Healthy financial habits are not dissimilar to healthy eating habits. Getting a good start is important. Beyond financial security, making good financial decisions has big implications for our overall health and wellbeing too. Being ‘good with money’ is a protective factor against delinquency in young adults, equips people to make plans in their best interest for retirement, helps people steer clear of scams, manage credit and loans, avoid credit traps such as payday loans and supports, and better weather emergencies and income disruptions. Finally, a standalone course based on managing personal finances also promotes financial and mental wellbeing, as students are active partners in working towards a secure future for themselves. Anyone who has been awake all night worrying about a big bill or credit card knows this to be true.
Shouldn’t children be learning this stuff at home?
Experts say that in an ideal world, children would be learning about money at home from a young age. The University of Arizona has released research showing that parental influence is twice that of friends when it comes to managing personal finances, but acknowledges that this approach assumes that parents and caregivers are themselves able to navigate the complex financial world we live in now. From crypto, to buy now/pay later apps, online savings, credit cards, superannuation and student loans, there’s a lot to know. It’s no surprise parents feel nervous about the ‘brave new world’ of personal finance.
What does a “rigorous” financial education look like?
We have an exceptional cohort of teachers ready to equip our students with the knowledge they need to thrive, so we are already well-placed to arrest the decline in financial literacy. What would the “rigorous” financial education experts recommend look like in action? The authors of The Financial Literacy of Young Australians Report make the following six suggestions in The Conversation*:
- Elevate financial literacy in high schools, ideally as a standalone program, as well as incorporating principles of financial literacy into as many curriculum areas as possible – particularly in the well-being and pastoral care area – would be beneficial.
- Financial literacy education in maths needs to be improved using a range of approaches – not only calculation activities.
- Financial literacy education should be expanded to subjects other than maths and business, in line with shifting the focus from financial calculations to financial concepts.
- Learning activities should be aligned with the student’s general level of financial experience, ie: be in context and relevant.
- Students need more exposure to effective financial strategies, in particular, how to moderate (or control) spending and saving.
- A range of assessment methods should be offered to enable students to show what they have learnt.
(*Edited for length and clarity)
In conclusion
Anyone with even a passing interest in education recognises that teachers are already working heroically in a crowded curriculum. Will financial literacy evolve in schools the way experts hope? Watch this space.
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